@article{191827a019484a858035ba73e8b15d6b,
title = "Financial infrastructure, technological shift, and inequality in economic development",
abstract = "This paper presents an overlapping generations model with technology choice and imperfect financial markets, and examines the evolution of the income distribution in economic development. The model shows that improvements in financial infrastructure facilitate economic development both by raising the aggregate capital-labor ratio and by causing a technological shift to more capital-intensive technologies. Although a higher capital-labor ratio under a given technology reduces inequality, a technological shift can lead to a concentration of economic rents among a smaller number of agents. We derive the condition under which an improvement in financial infrastructure actually decreases the average utility of agents.",
keywords = "Credit Rationing, Enforcement, Income Distribution, Rents, Technological Shift",
author = "Ryo Horii and Ryoji Ohdoi and Kazuhiro Yamamoto",
note = "Funding Information: An earlier version of this paper was circulated under the title “Finance, Technology and Inequality in Economic Development.” We are grateful for comments from Koichi Futagami, Akiomi Kitagawa, Nobuhiro Kiyotaki, Makoto Saito, Masaya Sakuragawa, Akihisa Shibata, Ping Wang, and the seminar participants at the Kansai Macroeconomics Workshop, Kyoto University, Peking University, Tokyo Institute of Technology, and Tokyo University. This study was partly supported by JSPS Grants-in-Aid for Scientific Research (16730097, 19730142). The comments from the Associate Editor and two referees are gratefully acknowledged. Any remaining errors are our own. Graduate School of Economics , Osaka City University , 3-3-138 , Sugimoto , Sumiyoshi-ku , Osaka 558-8585 , Japan ; e-mail: ohdoi@econ.osaka-cu.ac.jp . 30 01 2012 04 2013 17 3 531 562 Copyright {\textcopyright} Cambridge University Press 2012 2012 Cambridge University Press ",
year = "2013",
month = apr,
doi = "10.1017/S1365100511000356",
language = "English",
volume = "17",
pages = "531--562",
journal = "Macroeconomic Dynamics",
issn = "1365-1005",
publisher = "Cambridge University Press",
number = "3",
}
